Correlation Between Meli Hotels and CVS Group
Can any of the company-specific risk be diversified away by investing in both Meli Hotels and CVS Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Meli Hotels and CVS Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meli Hotels International and CVS Group plc, you can compare the effects of market volatilities on Meli Hotels and CVS Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Meli Hotels with a short position of CVS Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meli Hotels and CVS Group.
Diversification Opportunities for Meli Hotels and CVS Group
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Meli and CVS is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Meli Hotels International and CVS Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVS Group plc and Meli Hotels is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Meli Hotels International are associated (or correlated) with CVS Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVS Group plc has no effect on the direction of Meli Hotels i.e., Meli Hotels and CVS Group go up and down completely randomly.
Pair Corralation between Meli Hotels and CVS Group
Assuming the 90 days horizon Meli Hotels International is expected to generate 0.63 times more return on investment than CVS Group. However, Meli Hotels International is 1.59 times less risky than CVS Group. It trades about 0.05 of its potential returns per unit of risk. CVS Group plc is currently generating about -0.07 per unit of risk. If you would invest 604.00 in Meli Hotels International on September 14, 2024 and sell it today you would earn a total of 114.00 from holding Meli Hotels International or generate 18.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meli Hotels International vs. CVS Group plc
Performance |
| Timeline |
| Meli Hotels International |
| CVS Group plc |
Meli Hotels and CVS Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meli Hotels and CVS Group
The main advantage of trading using opposite Meli Hotels and CVS Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meli Hotels position performs unexpectedly, CVS Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CVS Group will offset losses from the drop in CVS Group's long position.| Meli Hotels vs. Hyatt Hotels | Meli Hotels vs. InterContinental Hotels Group | Meli Hotels vs. INTERCONT HOTELS | Meli Hotels vs. Wyndham Hotels Resorts |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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